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May 8, 2020

Households Shore up Finances

Households are saving money by being frugal during lockdown, suggests figures from the Commonwealth Bank. Most households have the same income as before but greatly reduced expenditure, giving them the opportunity to add to savings and pay off debt. Banks are still lending and a significant number of households are also better off because of stimulus payments. Based on the bank’s credit and debit card transactions, overall spending for the week ended April 17 was 18% lower than a year ago. But the fall was not matched in wages and salaries which decreased by only 6.7% between March 14 and April 4, shows ABS figures. Since the start of the pandemic, banks have provided $45 billion in new loans to businesses, including nearly $8.5 billion to 23,000 small businesses, and another $6 billion in extended credit. Unemployment benefits, renamed from Newstart Allowance to JobSeeker Payment, have been doubled, to $565.70 for a single person with no dependants. The JobKeeper payment of $1500 a fortnight will come into effect in May.

May 8, 2020

Buyer Searches Rise Across Nation

Home buyer interest is up almost 50% on this time last year, according to property search data from realestate.com.au. Compared to April 2019, the number of people searching for a home NSW is 39% higher. In Victoria it is 40% greater, in Queensland it has lifted 33% and in South Australia it is up 40%. Prospective buyers have adapted smoothly to the new digitised ways of doing business as they continue to search for their new home. With in-person auctions being banned, open home inspections have been changed to private viewings, resulting in a huge increase in digital inspections and also private treaties. Some agents claim as many as 80% of their purchases are now off-market properties. Prospective buyers have viewed 3.16 million digital inspections since March 30, with a 325% increase in views of 3D tours since the first week of March. “There is still a healthy amount of people with an appetite for buying real estate,” says Thomas McGlynn, national head of sales at The Agency.

Feb 29, 2020

Revival Sparks Sales Spike

National developer Stockland has recorded a 60% increase in new housing sales in the last three months of 2019, with residential property and retirement living expected to continue to deliver strong results. The housing market has rebounded since July making Stockland’s results consistent with other market measures – new loan commitments have increased on the back of interest rate cuts, house prices in most major cities are rising and first-home buyers are finding their way into the market. Stockland chief executive Mark Steinert says the group has a large pipeline of active projects with over 4,200 contracts on hand. “We have indicated in this release that in FY2021 we expect a significant lift in settlement volumes to over 5,800, which is moving up towards the top of the cyclical range that we’ve seen historically,” Steinert says. According to Jones Lang LaSalle, the outlook for the apartment markets in Sydney, Perth and Canberra is promising and though buyer confidence has rebounded in Melbourne, inner city apartment development remains challenging.

Feb 27, 2020

Renovations Hit Record Levels

Cheaper finance and fewer property listings are behind the growing trend of home renovations, says REA Group chief economist Nerida Conisbee. Australian Bureau of Statistics data shows Queensland councils have approved the highest number of alterations and additions to homes during the six months to the end of December. Around $930 million in major residential renovations work was approved in Queensland, $80 million more than in the same period the previous year. “It doesn’t surprise me,” says Conisbee. “Firstly we’ve had three interest rate cuts. Getting finance is a lot cheaper so people are able to borrow more money. “The second issue is around the fact that there are fewer listings, so even if people want to upgrade into a new home, a lot haven’t been able to find one, so it becomes attractive to renovate the one they’re in. “Also if you are looking for a bigger home, it may be better value to renovate your (current) home because of the cost of moving and selling.” Quote of the Week “Firstly we’ve had three interest rate cuts. Getting finance is a lot cheaper so people are able to borrow more money. The second issue is around the fact that there are fewer listings, so even if people want to upgrade into a new home, a lot haven’t been able to find one, so it becomes attractive to renovate the one they’re in.” - REA Group chief economist Nerida Conisbee

Feb 1, 2020

Multi Generations The New Norm

Increasingly, several generations of Australian families are living together under the same roof. Social demographer Mark McCrindle says there are several reasons for the lifestyle choice. “Younger generations are either leaving home later or returning back to the parental home,” he says. “Then on the parents’ side, they’re living longer and sometimes the older parents are moving in with the middle-aged children, creating the three or, in some cases, four generations under the one roof.” The practice of generations Y and Z living with the family for longer periods due to affordability constraints now includes Baby Boomers, who are sharing their household expenses with their adult children to not only save money, but to maintain their lifestyle. McCrindle says fewer than 10% of Australians now move out of their home into retirement homes. Having several generations sharing the running costs of the home creates a win-win situation because each party is paying less than they would if they were running their own rental, he says.

Jan 16, 2020

Listings Drop Puts Pressure On Prices

Home buyers have been active in markets across Australia, making the most of favourable lending conditions by buying up and depleting stock levels of properties for sale. The latest figures from SQM Research show listings nationwide fell 12% in December compared to the same time a year earlier. The stock shortage has inspired a rise in asking prices, with the national average rising by 2.4% for houses and 0.8% for units during December. Data from realestate.com.au shows a surge in buyers searching for properties in many states, with Brisbane recording a 63% jump in searches, NSW 50% and Victoria 36% over the year to December. That trend is set to continue into the early months of 2020, according to analysts and agents, causing more vendors to list their properties for sale. “When people get confident that the market has turned around and they can see the demand there, then the listings pick up,” AMP Capital’s chief economist Shane Oliver says.

Jan 13, 2020

Green Home Loans Offer 2.44%

Australians will soon be able to get a discounted home loan if they buy or build housing that meets high energy efficiency standards, with rock-bottom interest rates from 2.44%. The Clean Energy Finance Corporation is launching a green home loan program for borrowers who meet a minimum 7-star energy rating. Bank Australia is the first lender to offer the scheme and will grant a 0.4 percentage point discount on its home loan rate. The energy rating will be assessed under the Nationwide House Energy Rating Scheme which provides guidelines for sustainable design principles and construction techniques for a range of climate zones across Australia. The property sector accounts for almost a quarter of Australia’s greenhouse gas emissions, according to the CEFC’s investment team executive director Richard Lovell. He says sustainable housing design and construction could improve energy and economic outcomes. The Bank Australia Clean Energy Home Loan will fund up to $60 million, providing the interest rate discount to mortgages below $1.5 million.

Jan 7, 2020

Brokers Optimistic About 2020

A survey of mortgage brokers has revealed a high level of optimism for residential real estate markets in 2020. The HashChing 2020 broker survey has found that most mortgage brokers expect the recovery in major markets to continue, interest rates to fall further and investors to return to the market in large numbers. HashChing CEO Arun Maharaj says brokers are “justifiably optimistic”. “Brokers are reporting an increase in first-home-buyer activity, probably as a result of the cooling that happened in 2019 combined with lower interest rates,” he says. “With those rates predicted to stay low, it’s easy to see why brokers are looking forward to a strong 2020.” There was an “almost unanimous” view that the recent increases in house prices in capital city market, notably in Sydney and Melbourne, will continue through 2020. There are also expectations that first-home-buyer activity will increase and investors will become more active in 2020 than last year. “It’s clear that investors took a step back in 2019,” says Maharaj. “With such optimism around prices and the government stepping in and loosening credit restrictions, it’s hard to argue with brokers that first home buyers will once again find themselves competing with investors.” The Federal Government’s FHB mortgage guarantee scheme started on 1 January 2020 and mortgage brokers expect it be over-subscribed. “While 10,000 places is small in the context of the entire Australian market, it will help keep the FHB group competitive, especially outside of the Melbourne and Sydney markets,” he says. Most brokers also predicted another RBA reduction in the cash rate, although expectation is split between the rate coming to rest at 0.5% and 0.25% rate by the end of 2020.